What tax benefits does a non-profit organization enjoy?
September 1, 2022 | 50,00 EUR | answered by Emilia Vöss
Dear lawyer specializing in association law,
I am Petra Schneider and I am the head of a non-profit organization that is dedicated to social projects. Lately, I have been increasingly concerned with the topic of tax benefits for non-profit organizations and I am unsure about the options available to us.
Currently, our organization regularly pays taxes on our income and I am wondering if there are any tax advantages that we, as a non-profit organization, can take advantage of. I am worried that the tax burden could financially impact us and would like to know what specific tax benefits are available to us as a non-profit organization.
I would like to know from you what tax breaks and exemptions are available for non-profit organizations, and how we can utilize them for our organization. Are there specific requirements that we must meet in order to benefit from tax advantages? And what concrete steps must we take to apply for and receive these benefits?
It would be of great importance for us as an organization to learn what financial relief could be provided to us through tax benefits, in order to continue successfully carrying out our social projects.
Thank you in advance for your support and advice.
Sincerely,
Petra Schneider
Dear Mrs. Schneider,
Thank you for your inquiry regarding the tax benefits for non-profit organizations. As a lawyer specializing in association law, I can provide you with detailed information on the opportunities available to non-profit organizations to benefit from tax advantages.
In Germany, non-profit organizations benefit from various tax advantages aimed at financially supporting their charitable purposes. The most important tax benefits include exemption from corporate tax, trade tax, and value-added tax. These tax exemptions are designed to financially relieve non-profit organizations as they are solely dedicated to charitable and benevolent purposes.
However, in order for your organization to benefit from these tax advantages, certain requirements must be met. Firstly, your organization must be recognized as a non-profit. This means that its statute explicitly pursues charitable purposes and actually implements them. Charitable purposes include, for example, promoting education, science, art and culture, supporting persons in need, or environmental and nature conservation.
To obtain recognition of non-profit status, you must submit an application to the competent tax office. It is important that your statute complies with the requirements of non-profit law and that you regularly and transparently report on your activities. The tax office will then assess whether your organization can be recognized as non-profit and thus benefit from the tax advantages.
Once your organization is recognized as non-profit, you are exempt from corporate tax. This means that you do not have to pay taxes on your income as long as it is solely used for charitable purposes. You are also exempt from trade tax if your economic activities are of subordinate importance. The exemption from value-added tax applies when your turnover is below certain thresholds and solely serves charitable purposes.
Overall, the tax advantages for non-profit organizations provide important financial support to successfully carry out their charitable projects. It is advisable to inform yourself early on about the requirements and opportunities of non-profit status and to seek professional assistance if necessary.
I hope that this information has been helpful to you and I am available for further questions.
Kind regards,
Emilia Vöss
